The Drilldown: Russia calls on oil-producing countries to come together to rebuild economy

After a falling-out with the Organization of the Petroleum Exporting Countries (OPEC) earlier this month, Russia is now calling on members of the group to work together to save the global economy.

“Joint actions by countries are needed to restore the (global) economy… They (joint actions) are also possible in OPEC+ deal’s framework,” Kirill Dmitriev, the head of the Russian Direct Investment Fund (RDIF) said in a phone interview with Reuters.

Dmitriev acknowledged that Russia has been in contact with Saudi Arabia and other countries in an effort to increase OPEC+ members and develop a “joint agreement” that could balance out the global oil market.

Internationally

A two-week period has seen the North Sea oil rig lose 40 per cent of its workforce as companies try to flatten the curve of COVID-19. A nation-wide lockdown in the U.K., as well as increasingly low global oil prices, have resulted in over 4,000 offshore oil rig contractors losing their jobs.

There are usually close to 11,500 staff operating the North Sea’s offshore oil and gas rigs, but this number has dropped to 7,000. All non-essential work on offshore oil rigs has been cancelled to help make social distancing easier for workers during this time, reports the Guardian.

Last Friday, Cairn Energy announced that it would be cutting its spending plans by close to a quarter to stay afloat during this uncertain time. Cairn’s North Sea spending plan will see a cut of US$20 million, resting at US$45 million. Cairn will also be reducing its spending on exploration by one third, to US$100 million.

Meanwhile, oil inventories are expected to increase by 1.8 billion barrels during the first half of this year, according to the IHS Markit. When looking at the current rates of supply and demand, IHS suspects that the world is three months away from having a shortage of places to store oil. There will be a shortage of places to store oil at a global level in as little as three months.

Yesterday, the price of Western Canadian Select heavy oil dropped 30.5 per cent, hitting US$6.45 a barrel. Canadian companies that have pipeline access to the U.S. Gulf Coast refineries have been able to receive higher prices, closer to US$16 a barrel, because there is still a demand for Canadian heavy oil in the U.S, according to the Financial Post.

In other news, although maintenance is critically needed at Shell’s Scotford refinery site based in Alberta, the company has decided to delay any action due to the coronavirus outbreak. The company will be pushing needed maintenance activity to happen later this year.

“Our decision to delay the turnaround stems from that deep sense of care for our Shell employees and the contractors who support us as well as the health and wellbeing of everyone who works at Scotford,” Conal MacMillan, a spokesperson for the company said yesterday, reports the Calgary Herald.